INTRODUCTION TO

MANAGERIAL
ECONOMICS
Unit I
Reference:
Managerial economics -Dr. D.M Mithani,
 WHAT IS ECONOMICS?

• Root of the word ‘economics comes from Greek

word ‘Oikonomia’ (management of household or
household rules).

• Economist’s dictionary of economics defines it as

“The study of production, distribution and
consumption of wealth in society’
 WHAT IS ECONOMICS?

• Its basic function is to study how people-

individuals, households, firms and nations –
maximize their gains from their limited resources
and opportunities.
 Managerial Economics

• Definition:
• “Managerial Economics is concerned with the application
of economic concepts and economics to the problems of
formulation rational decision making” – Mansfield

• “Managerial Economics … is the integration of economic

theory with business practice for the purpose of facilitating
decision making and forward planning by management”
Nature of Managerial Economics

• Micro Economic
• Normative Micro Economics (what should do)
• Pragmatic
• Managerial Economics takes the help of macro
economics
 Scope of Managerial
Economics

I. What to produce?
II. How to produce?
III. For whom to produce?
 Relationship to….

1. Production management (strategic decisions,

operating decisions and control decisions).

2. Marketing management(marketing strategy

decisions, pricing decisions, value chain analysis,
cost analysis.)

3. Finance management(financial decisions)

 Relationship to….

4. Personnel management(strategic human resource,

planning models, HR-performance management )

5. Operation research (advanced analytical methods

to make better economic and business decisions).
Role & Responsibilities Of Managerial Economist